agricultural sector trends in ceecs

Directorate for Food, Agriculture and Fisheries 1

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES

OECD OCDEORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES

AGRICULTURAL SECTOR TRENDS IN CEECs

Loek BoonekampHead of the Trade and Markets Division

OECD, Directorate for Agriculture

EastAgri conferenceRome, 28 February, 2005

OECD OCDEDirectorate for Food, Agriculture and Fisheries

2

Outline of the Presentation

• Macro-economic trends

• The context of agricultural world markets

• A focus on Ukraine


3

Macro-economic Trends

• Robust GDP growth


4

Robust GDP Growth

-4

-2

0

2

4

6

8

10

12

14

1997 1999 2001 2003 2005Pe

r c

en

t c

ha

ng

e f

rom

pre

vio

us

ye

ar

CEE

Ukraine

Belarus

EU


5

Macro Economic Trends

• Robust GDP growthRobust GDP growth

• Inflation slowly controled


6

Inflation slowly under control

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005

Pe

r c

en

t CEE

Ukraine

Belarus

Euro zone


7



• Inflation slowly under controlInflation slowly under control

• External debt remains heavy….


8

External debt remains heavy…

0

5

10

15

20

25

30

1997 1999 2001 2003 2005

pe

r c

en

t

Emerging anddevelopingeconomies

CEE

Developing Asia

external debt servicing as a per cent of exports


9



• Inflation slowly under controlInflation slowly under control

• External debt remains heavy….External debt remains heavy….

• ….Weighing down on investments


10

….Weighing down on investments

0

5

10

15

20

25

30

35

40

1999 2001 2003 2005

pe

r c

en

t CEEDeveloping Asia

investments as a per cent of GDP


11

Agricultural World Market Context: The Evolving Economic Environment

• Increasing competition in world markets– Cereals from OECD– Renewed export subsidy use in EU (weak USD)– Meat, sugar, cotton, oilseeds from South America


12

Growing Competition in Meat and Oilseed Export Markets

0

20

40

60

80

100

120

140

160

Beef Pigmeat Poultry Oilseeds Oilmeal

Per

cen

t ch

ang

e

OECDexports

Exports fromBrazil andArgenina

2013 compared to 1998-2003 average

6.1

2.1

4.3

0.5

4.6

1.4

35

46

11

46


13


• Increasing competition in world marketsIncreasing competition in world markets– Cereals from OECDCereals from OECD– Meat, sugar, cotton, oilseeds from South AmericaMeat, sugar, cotton, oilseeds from South America– Renewed export subsidy use in EU (weak USDRenewed export subsidy use in EU (weak USD)

• Continued productivity growth in agriculture– Downward pressure continues on real commodity

prices


14

World Prices Remain Low in Real Terms

0

100

200

300

400

500

600

1971 1985 1999 2013

US

D/t

Wheat Coarse grains

Oilseeds

0

100

200

300

400

500

600

1971 1985 1999 2013U

SD

/100

kg

Beef Pork Butter


15


• Changing consumer demand

• Growing civil society voice

• Changing market structures

• Increasing globalisation

• Shifting competition focus

• Growing role of standards


16

A Focus on Ukraine

• The policy situation– Low support levels


17

Support in Ukraine Generally Low…

-100

-80

-60

-40

-20

0

20

40

60

80

100

1987 1991 1995 1999 2003

% o

f fa

rm r

ec

eip

ts Total PSE PSE CropsPSE LivestockPSE OECD

Producer support estimate


18

…Also Compared to Other CEECs

0

5

10

15

20

25

30

35

40

45

Per

cen

t

Bulgaria

Ukraine

Poland

Slovak Republic

Hungary

Czech Republic

Romania

Slovenia

EU

OECD

Per cent PSE in 2001


19

A Focus on Ukraine

• The policy situationThe policy situation– Low support levelsLow support levels–With big differences between commodities


20

Big Differences in Levels of Support

-30

-20

-10

0

10

20

30

40

50

2001-2003 average

Pe

r c

en

t

PoultrySugar

Pig meatWheatBeef and veal

MaizeOilseedsEggs

Milk

PSE by commodity - 2001 to 2003 average


21

A Focus on Ukraine

• The policy situationThe policy situation– Low support levelsLow support levels– With big differences between commoditiesWith big differences between commodities–Most as budgetary support


22

Most Support Given as Direct Payments

-6000

-4000

-2000

0

2000

4000

1993 1995 1997 1999 2001 2003

Mill

ion

US

D

Budgetarysupport

Market pricesupport

Composition of support over time


23

A Focus on Ukraine

• The policy situationThe policy situation– Low support levelsLow support levels– With big differences between commoditiesWith big differences between commodities– Most as budgetary supportMost as budgetary support

• High tariffs despite low price support


24

High Tariffs Despite Low MPS

0

50

100

150

200

250

300

Whe

at

Mai

ze

Sunseed

Beef

Pigm

eat

Poultry

Butter

Eggs

Sugar

Pe

r c

en

t Current AVT

2002 AVE

Offered AVT


25

Lowering MFN Tariffs Does Not Affect Domestic Prices

-50

0

50

100

150

200

250

300

Pe

r c

en

t

MFN Tariff (AVE)

Price differential

Binding tariff

Price differential=(domestic price-border price)/border price


26

Some Concluding Remarks

• Aggregate support levels are moderate• Substantial distortion for some commodities• No need for severe border measures• Substantial scope for Ukrainian tariff cuts under

WTO accession• WTO membership would lay stronger

foundations for ‘good’ agricultural policies…• ..and facilitate access to the global food value

chain by Ukrainian farmers and food producers

agricultural sector trends in ceecs

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